FTC on Greenwashing: Is That All There Is?

The Federal Trade Commission in mid-June charged three companies, Kmart Corp., Tender Corp. and Dyna-E International, with making false and unsubstantiated claims that their paper products were “biodegradable.”

Kmart and Tender agreed to administrative settlements in the cases against them, while the case against Dyna-E will be litigated. The FTC made this announcement in testimony before the U.S. House Subcommittee on Commerce, Trade, and Consumer Protection of the Committee on Energy and Commerce in a hearing titled, “It’s Too Easy Being Green: Defining Fair Green Marketing Practices.”

While this sounds like a step forward in protecting consumers from greenwashing, other developments at the hearing indicated that the FTC is not on target for enacting new green marketing standards in mid-2009. After an FTC workshop last year, James Kohm, Associate Director of the Enforcement Division in the FTC’s Bureau of Consumer Protection, told Kevin Tuerff, CEO of Green Canary Sustainability Consulting, that the agency would issue new guides for the use of environmental marketing claims (“Green Guides”) around the middle of this year.

Representative Bobby Rush, D-Ill., chairman of the Subcommittee on Commerce, Trade and Consumer Protection of the House Committee on Energy and Commerce said at the hearing, “More than ever before, the shelves of our supermarkets, hardware, ‘Big Box,’ home improvement, and pet stores are being lined with goods bearing labels touting themselves as ‘natural,’ ‘biodegradable,’ ‘eco- friendly,’ ‘sustainable,’ ‘carbon-neutral,’ ‘recyclable’ and ‘non-toxic,’ just to name a few.” Congressman Rush is also concerned about inauthentic green certification labels, noting, “For a fee, these companies will certify anything as green, affording false comfort to purchasers that the products meet environmental and safety standards.”

Last year, under the FTC’s current review of the 1992 Green Guides, the agency held a series of workshops and plans to study consumers’ understanding of particular claims, such as “sustainable” and “carbon neutral,” which were not common when the FTC last updated its guides.

EnviroMedia/Green Canary’s Kevin Tuerff, Steve Roberts and I participated in the workshops. We had a hunch the Feds would take a long time to act, which is why in January 2008 we created EnviroMedia’s Greenwashing Index, in conjunction with the University of Oregon School of Journalism and Communications.

In Mr. Kohm’s Congressional testimony, he stated that the FTC does not set environmental standards or policy, but rather protects consumers from unfair or deceptive practices. According to a report by Reuters, Kohm said the FTC tried to collect feedback from consumers about perception and understanding of green claims, but didn’t receive many comments.

So now, nearly a year and a half later, the agency is well behind schedule and plans to conduct its own study of consumer understanding of green marketing claims. Their analysis of that data won’t be completed until later this year, further delaying the implementation of the new Green Guides. This division of the FTC has undoubtedly been under-resourced and needs more attention.

Reuters wrote, “Depending on how new rules are structured, the changes could also provide a boost for startups that fall on the greener end of the spectrum in these sectors, as well as those working on tools for informing consumers or monitoring and measuring the environmental impact of companies’ operations.”

We have confidence the Obama Administration will eventually deliver the new Green Guides. In the meantime, what’s a consumer to do?

According to a January 2009 national study by EnviroMedia and Green Seal, 30 percent of Americans had no idea how to evaluate whether a company’s green claims are true. And another 10 percent blindly trusted the claims – that means 40 percent of Americans are very much in need of proper education on how to scrutinize green claims. That is all the more reason to update and enforce the Green Guides. A growing number of U.S. consumers (17 percent) are doing online research into a company’s green claims.

The bigger question is whether marketers will continue thumbing their noses at authenticity in green advertising and our global environmental challenges. Our own ad industry doesn’t want regulation but isn’t stepping up to self-educate and enforce its own code of ethics.

Valerie Davis is CEO of EnviroMedia Social Marketing and President of Green Canary Sustainability Consulting

One thought on “FTC on Greenwashing: Is That All There Is?”

When I read the FTC’s comments yesterday, I had the exact same reaction. Thank you Valerie for your comments.

One thing I’d like to add, is that the market really needs to take care of this. We need for “green” something like “Certified Organic” to emerge. Right now there are just way to many “green certifications” that are popping up, that have no real meat behind them, and therefore because there are multiple certifications, there really isn’t one. What we need is something like the GRI to emerge, something that can become the defacto “green” standard, like what GRI has become for CSR reporting and what the Climate Registry has for GHG reporting.